Iron Mountain: Strong Core Operations And Fresh Value (NYSE:IRM)

Sundry Photography/iStock Editorial via Getty Images Iron Mountain Incorporated ( IRM ) has become a bit of a battleground stock. Bulls point toward rapid growth and a low AFFO multiple, while bears are concerned by high debt and AFFO calculations. The truth, as usual, is somewhere in the middle. This article will address some of the most debated aspects of Iron Mountain and try to provide a clean perspective on valuation, balance sheet, and growth. Let us start by examining the bear thesis, as it has clearly had quite a bit of traction with regard to IRM’s stock price. The IRM Bear Thesis: I think there are 3 reasons IRM’s stock price has dropped substantially in the last year. IRM got too expensive. It got caught in the AI selloff. Short attack. Iron Mountain is a complex business dealing with all forms of information management. Decades ago, this primarily meant physical boxes of paper that IRM would store securely in vaults. As information usage evolved, IRM evolved with it. IRM now converts physical information to digital and is one of the world’s leading companies at managing, securing, and retrieving both physical and digital information. Part of that digital transformation involves the building of data centers in which to store and utilize said information on behalf of its clients. In the process, the market started trading IRM as a data center REIT. While IRM does have an active data center pipeline, it is still a relatively small portion of their business. Thus, I thought it became overvalued as it got swept up in AI/data center excitement and is now coming back down with the AI bubble partially deflating toward the end of 2025. We will dig deeper into valuation later in this article, but with the selloff, it is starting to look quite a bit more reasonable. The most recent leg down in IRM’s stock price seemed to be related to a short attack . In my opinion, each point emphasized by the bear thesis can be fairly easily disproven. Regarding leverage, a significant portion of the discrepancy is related to operating lease liability, highlighted in yellow below. This is $2.28B of liability that exists on the balance sheet, but it is not really debt. IRM rents a portion of their buildings, which, starting in 2016 with ASU 2016-02 , gets recorded as a liability for the entire amount owned under the lease. It’s not really debt. Sure, IRM will have to pay the rent, but it is over a very long period of time, and in exchange, they will get to use the properties and generate revenues from the properties. $2B of debt is a net present value of negative $2B. $2B of lease liability has a net present value of approximately 0. Thus, IRM excludes this liability from their debt calculation, which I think they are right to do, and it is fairly common practice to do so. IRM’s calculations of debt to EBITDA are essentially verified by the...

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